I have always assumed that if your career/job pays you decent money that you should have no trouble getting ahead financially as long as you’re responsible with money. But recently an old friend who works in a high powered, high paying, high stress career made me rethink that assumption.
My friend works for a large company and he is one of the big-wigs. He travels a lot, works ridiculously long hours, and has a lot of stress. On the other hand, he is paid a great deal of money (low/mid six-figures) and lives in an average cost of living area. Yet he’s not getting ahead. He called me wanting to know what he could do differently to better his financial situation so that he could have some fun in his life without going into debt. He felt that with the amount of money he was making, he should be able to afford some new computer equipment, travel for pleasure, buy a nicer TV and have some work done on the house, but there’s never anything left over and he (rightly so) refuses to finance these things.
After going through his finances, I was surprised to see that he is pretty good with money. I expected that if he were having problems getting ahead that he would have exorbitant car or mortgage payments, a shopping or gizmo addiction, a love of eating out, or some other easily identified and solved problem. But this was not the case. Sure, he had some areas that could be cut down (as do we all), but nothing that could be considered irresponsible or dangerous for his area and budget. He is able to meet all his obligations and save well for the future, but there’s not as much left for “fun” as you would think someone with this type of salary would have.
As we sat there and puzzled out his finances, the things that jumped out at me were his work related expenses. Many of these are things that cannot be cut or changed without changing jobs. It’s a catch-22. If he leaves his current job, his expenses in certain areas will decrease, but likely so will his salary, still leaving him little discretionary income. If he stays with the current job, he makes a great salary, but still has to pay these extra expenses which eat into his discretionary income. So how is his career killing his wealth? We identified seven work-related drains on his finances.
Clothing: Because he is one of the top officers in the company and in the public eye, he is required to dress well. Three piece suits are the norm, and those don’t come cheap. Neither does the dry cleaning. He told me that he’s tried lower priced suits, but it’s really a wash expense-wise because they don’t last as long or wear as well as the more expensive models he favors. If he buys the cheaper suits, he ends up replacing them more often, equaling or exceeding the expense of the better models. And even though he tries to wear the suits multiple times before having them cleaned, the cleaning costs still add up.
Transportation: He drives a nice car (an Audi) but, again, this is something that he feels he must do because he frequently shuttles clients around. He is making payments on the car which, while affordable on his income, are not as cheap as if he’d bought a used Ford. However, he feels that if he drove an older or “less nice” car, he’d be sending the wrong message to clients and this is a position that his company subtly endorses. He feels that he made a decent compromise with the Audi because his colleagues drive far more luxurious cars. His is actually the “cheapest” in his firm. He must also pay for he fuel he uses, of which little is reimbursed.
Parking fees, for which his firm does not reimburse him. Because he frequently has to shuttle clients around, mass transit is not an option. He needs to have his car with him. However, where he works there is no free parking; it’s all in paid garages.
Travel: He travels frequently for business, both domestic and international. His company does not reimburse many of his expenses. I thought this was odd; I always assumed that most companies reimbursed business travel expenses, but evidently not all of them do. My friend told me that his company pays a higher salary rather than offer reimbursement, but it’s not enough to fully cover the amount of travel he needs to do. Hotels, airfare, rental cars, and food all add up, particularly when he travels abroad where the exchange rate is unfavorable. He does what he can to cut costs (shopping for deals, joining rewards programs for free airfare and hotel stays, etc.), but it still takes a big chunk out of his monthly budget.
Stress: He sees a therapist to help deal with the huge amount of stress he’s under, so that’s an added expense not fully covered by his insurance. He also pays to use the gym at work to try to relieve stress and stay healthy. He can’t exercise outside for free because he often can’t get away from the office until late and there is a safety issue where he lives. He researched other gyms and found that the one at work was the best deal, both price-wise and time saving-wise, so he feels he’s done the best he can to cut that expense.
Food: He tries not to eat out very much personally but sometimes it’s unavoidable, such as when he has to have food delivered late at night because he’s run out of what he packed. He also has to entertain clients and, as with the travel, much of this is not reimbursed directly. Since he doesn’t want to tell a client not to order drinks or to order the cheapest thing on the menu, these meals can get extravagant.
Client entertainment: Sometimes he needs to take a client to a show or an event and, as with travel and food, the bill is on him.
So what are the solutions? There aren’t many. There is little here that can be altered without changing jobs or careers completely. He’s already trying to save on the travel, food and entertainment portions by getting what deals he can. All I could tell him was to keep it up and try to find even more ways to cut the costs. But he can only go so far before he runs afoul of the image his company wants to project. Presenting a two-for-one coupon at the restaurant or offering to take someone to Chili’s instead of the high priced steakhouse is fine with my friend, but not fine with his company. It’s the same with the car and the clothing. There is little to cut without violating the spoken and unspoken “image rules.” We did manage to find a cheaper dry cleaner who does good work, so that’s some money saved. He is currently looking to see if purchasing some gym equipment might save him money on gym fees in the long run, and he’s packing more food to take to the office to cut down on late night food runs. But even with the cuts, it’s still not enough to give him a significant amount of discretionary money.
I’ve never heard of a company that refuses to reimburse so many business expenses, but apparently they are out there. I asked my friend if he would consider changing companies, finding one that doesn’t put so much of the burden on the employees. He is thinking about it. But while another company might reimburse him, he would like receive a smaller salary, making it somewhat of a wash.
His is an interesting situation in that he, himself, is fairly frugal and good with money, but the company and industry he works in are all about image. He’s expected to “spend up to” that image with little help from his employer. It makes him uncomfortable at times, although he does enjoy the work and most of the people he works with. The only real answer to his predicament is to find an industry that does not rely so heavily on image and that allows him to live and spend as he wants to. He is considering a total career change in the future to find work that probably will pay considerably less, but won’t require him to live so far out of balance with his financial values. In the meantime, he is in the unenviable situation of making great money, but having very little fun in his life. His career is killing his wealth.